Telephone directory assistance continues to be an extremely important service for consumers and businesses. It is estimated that in 2004 there will be approximately 8 billion telephone calls placed to directory assistance services (i.e., 411, 555-1212) in the United States. The average cost billed for these calls is now in excess of $1.00.
Directory assistance services are thus an enormous revenue center for both wired and wireless carriers, with profit margins rumored to be in the 90% range. Nearly all directory assistance calls which are placed by consumers are those looking for a phone number for a specific business or individual that could traditionally be found manually in the “white pages”.
To date there is truly no comprehensive telephone based directory assistance available. In particular, consumers may be looking for a business for which they know a category (i.e., plumber, lawyer, travel agent, taxi, etc.) but for which they do not know a name and/or location. There is also no way for a consumer to use a telephone to search by “keyword” for a product or service they wish to purchase. These types of searches are still reserved for consumers to use traditional sources such as the “yellow pages.” Increasingly now, consumers can also turn to internet based on line directories and search engines for this type of search.
However, such directory searches often tend to be local in nature, meaning that the consumer is actually looking for a merchant in their immediate geographic area. It is this reality which has driven the two largest internet search engine advertising platforms, Google and Overture (a Yahoo! subsidiary), to recently launch localized advertising options for their so called Cost Per Click (CPC) based advertising services.
There has recently, of course, been much attention paid to online keyword search market. Yahoo's acquisition of Overture in July 2003 for $1.6 billion has led to a doubling of Yahoo's market capitalization, recently at $15 billion. Google's Initial Public Offering (IPO) in August 2004 valued the company at over $23 billion. Almost all of Google's revenue is derived from their “AdWords” paid search product. Both Microsoft and AOL are aggressively entering the marketplace with their own online search solutions. Current estimates are that online paid keyword search market will reach $5.5 billion in 2009.
But the reality is that of the 13 million small to medium size businesses in the United States, fewer than 300,000 of them advertise using web based services (see Jupiter Research, Pay Per Call Survey, March, 2004). The reasons for this are many, but include at least the fact that in order to advertise successfully online, a business must have both a viable website presence as well as the technical infrastructure to be able to handle the leads they receive, typically via e-mail. Furthermore, businesses need to have technical savvy in order to be able to create and manage one or more paid search campaigns. Perhaps it is for these reasons alone that businesses spent 46% of their advertising budget on yellow pages ads but only about 3% for internet search advertising.
While a cottage industry of search engine marketing companies has developed in order to bring more and more businesses online with paid search, the reality is that the majority of businesses are left out. Other reasons for this include the fact that because of the global nature of the internet, paid keyword search is the more effective for products and services which do not require contact with a local market. Furthermore, because of the bidding process for placement of paid advertisements, may small businesses are “squeezed out” of the internet search market by large national players who can afford to pay more in order to capture online leads. The majority of small businesses thus still rely primarily on the telephone as their primary means of generating sales leads. In an era where personal video recorders threaten to alter the landscape of television advertising, commercial free satellite radio systems limit the effectiveness of local radio advertising, and the national “Do Not Call List” has effectively eliminated traditional telemarketing, merchants and service providers looking to market themselves locally are actually becoming more limited in their choices.